New Bottom Line Volume 14.3 – CSR Reporting: Current Practices and Future Trends

Sunday, May 15, 2005

In our last issue I reported on Natural Logic’s recent analysis comparing the quality of corporate social responsibility (CSR) reporting and the quality of CSR performance.

Continuing our critical look at the burgeoning phenomenon of CSR reporting -2,000-3000 companies now produce CSR reports, by some counts – I promised to share the results of an unscientific survey of CSR reporters, conducted in late 2004 in collaboration with GreenBiz.com.

Here’s a summary of our key findings:

* Audience: While most people think of CSR reports as aimed at external audiences, employees were cited as the most important audience for these reports, with external stakeholders a close second; company management is far behind, with NGOs and media the least important.

* Format: Reports continue to move from print based to on-line, but most respondents seem to have a rather limited definition of “interactivity” and a limited vision of just how these reports can impact employees and management.

* Report Integration: While most companies publish separate CSR reports and annual reports, there is clear interest in integrating them in some way – combined reports; synchronized and jointly released reports; summarizing the CSR report within the annual report – yet substantial concern over the difficulties of doing so.

* Data management: Companies are greatly concerned with the accuracy of the data they collect and report, as well as with the timeliness, and complexity of the data management process.

* Reporting Systems: Despite increasing discussion of automation of data management and integration with management systems, companies – even very sophisticated ones – are still largely dependent on spreadsheets for data collection and management, while a significant minority have built custom applications.

* The Global Reporting Initiative (GRI) is GRI is important or very important for most companies, yet of little of no importance for a significant minority.

A more detailed summary is posted here. A complete tally of responses and verbatim comments is being provided to survey respondents.

There are many conclusions one could draw from this sort of survey. Here are a few of mine.

* CSR reports are becoming a more permanent feature of the business landscape

* GRI continues to make inroads as the presumptive standard

* Recognition of the potential business value of CSR reporting is still growing, but companies are still struggling to learn how to best realize that value

* CSR reporting still labors under inefficient processes that would not be tolerated for more mission critical tasks.

And some recommendations:

* When identifying the audience(s) for a CSR report – a decision that should rightly influence reporting strategy, content, delivery systems and design – consider both how they do use it, and how they could use it. To do that successfully: engage potential audiences early in the development process; expand their horizons about possible uses, approaches and supporting technologies; listen to what they say, but also – and usability experts always remind us – watch what they do.

* Once clear on audiences and objectives, track and follow up to see how well the report meets those objectives: does it reinforce strategic alignment? grow awareness? impact behavior? impact performance?

* Use the web, Luke! Downloadable PDF files does not interactivity make. Provide a user-centric web experience that enables different stakeholders to find the information most meaningful to them.

(Like any observer, I bring my own perspective: Natural Logic works with reporting companies – and with the firms that develop and produce CSR reports on their behalf – to reduce the pain and increase the value of CSR reporting, in three key ways:

* Business Metabolics KPI System that streamlines the task of collecting, managing, analyzing and deploying CSR performance data, and can transform a CSR report from an expensive press release into an interactive, real time management dashboard – that can help improve performance, not just report on it.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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